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Kline Industries International Pty Ltd v Queensland Building and Construction Commission[2015] QCAT 6

Kline Industries International Pty Ltd v Queensland Building and Construction Commission[2015] QCAT 6

CITATION:

Kline Industries International Pty Ltd v Queensland Building and Construction Commission [2015] QCAT 6

PARTIES:

Kline Industries International Pty Ltd t/as Kline Homes

(Applicant)

v

Queensland Building and Construction Commission

(Respondent)

APPLICATION NUMBER:

GAR420-13

MATTER TYPE:

General administrative review matters

HEARING DATE:

9 September 2014

HEARD AT:

Brisbane

DECISION OF:

Dr Cullen, Member

DELIVERED ON:

6 January 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The decision of the Queensland Building Services Authority to issue Direction to Rectify and/or Complete Number 39546 is set aside.
  2. A direction to rectify is not issued.

CATCHWORDS:

GENERAL ADMINISTRATIVE REVIEW – DIRECTION TO RECTIFY – DOMESTIC BUILDING WORK – whether issuing a direction to rectify would be reasonable where parties had entered into a settlement agreement in a prior building dispute in the Tribunal.

Queensland Building and Construction Commission Act 1991 (Qld), Schedule 2

Jones v Dunkel (1959) 101 CLR 298

REPRESENTATIVES:

APPLICANT:

Kline Industries International Pty Ltd t/as Kline Homes represented by Doyles Construction Lawyers, Mr Len Watt.

RESPONDENT:

Queensland Building and Construction Commission, was represented by in-house Senior Lawyer, Ms Cheriden Farthing.

REASONS FOR DECISION

  1. [1]
    In this Application, Kline Industries International Pty Ltd t/as Kline Homes (‘Kline Homes’) asks the Tribunal to review Direction to Rectify and/or Complete Number 39546, issued to it by the Queensland Building and Construction Commission (‘QBCC’).
  2. [2]
    Kline Homes argues that it was not reasonable for the QBCC to issue it with a Direction to Rectify, for the reason that the work in question was already the subject of a settlement agreement between Kline Homes and the homeowners for whom the allegedly defective work was performed, Mr Richard and Mrs Julie Cowey.
  3. [3]
    The Tribunal agrees that in the circumstances present, it was not reasonable for the QBCC to issue Direction to Rectify and/or Complete Number 39546, for the reasons that now follow.

Previous history of conduct

  1. [4]
    On 9 January 2012, Kline Homes and the Coweys entered into a domestic building contract for the construction of a two-story residence at 26 Conifer Crescent, Broadbeach Waters, Queensland.
  2. [5]
    Thereafter, the parties found themselves in dispute in relation to the building contract, in QCAT proceeding BDL263-12. Kline Homes commenced proceedings, alleging that the Coweys failed to make payments totalling $142,666.49. The Coweys filed a response and counter-application, alleging that the payments made by them exceeded the contract price, and that work was defective.
  3. [6]
    The dispute in BDL263-12 settled during a compulsory conference convened by QCAT, on 20 November 2012.
  4. [7]
    Subsequently, on 17 January 2013, the Coweys made a complaint about Kline Homes to the QBCC in relation to the same issues as those already raised in QCAT, in BDL263-12.
  5. [8]
    On 26 August 2013, the QBCC’s building inspector, Mr Peter Campbell, inspected the Coweys’ property, in the presence of both the Coweys and Kline Homes. Following this inspection, the QBCC issued Kline Homes with Direction to Rectify and/or Complete Number 39546, the subject of these proceedings.

Issues to be determined on a review of this nature

  1. [9]
    In reviewing the issuance of a Direction to Rectify and/or Complete, the Tribunal must determine the following:
  • Was the work building work?
  • If so, was the work defective?
  • Was the Applicant responsible for the defective building work?
  • Was the decision of the QBCC to direct the Applicant to rectify the building work reasonable in the circumstances?

Was the work building work?

  1. [10]
    The parties agree that the work performed by Kline Homes for the Coweys was building work.

Was the work defective building work?

  1. [11]
    Kline Homes argues that the building work was not complete, and that the home was not at practical completion. Mr Graydon Kline, the Director of Kline Homes, gave evidence to this effect at the hearing of this matter, and was available for cross-examination by the QBCC. Mr Kline further explained that he was in the process of addressing works that were the subject of a building report obtained by the Coweys from Mr Paul Roberts at the point in time that the Coweys took unlawful possession of the works. Shortly after the Coweys took possession of the works, Mr Kline says that he received a second Paul Roberts report, which the homeowners purport to be a ‘Handover Report’. Mr Kline says that despite their titles, the Paul Roberts’ reports are not proper Handover Reports, as it is clear that work was still in progress at the time of both reports.
  2. [12]
    The QBCC argues that the work is defective, and that practical completion had been reached. The QBCC has not called either Mr or Mrs Cowey, nor Mr Roberts, to appear in the Tribunal for purposes of giving evidence (and providing Mr Kline with the opportunity to cross-examine the evidence).
  3. [13]
    In these circumstances, there is no basis upon which the Tribunal might decline to accept Mr Kline’s evidence in relation to these matters. Mr Kline was the only witness before the Tribunal who was capable of giving evidence in relation to the progress of the building works and the terms of the settlement agreement entered into between Kline Homes and the Coweys (which will be discussed later).
  4. [14]
    Whilst the Tribunal considers that practical completion had not been reached in relation to the contract between the Coweys and Kline Homes, it remains that Schedule 2 of the Queensland Building and Construction Commission Act 1991 (Qld) defines ‘defective’ building work to include ‘faulty or unsatisfactory’ work.
  5. [15]
    In view of the report prepared by the QBCC’s inspector, Mr Campbell, the Tribunal concludes that the work that is the subject of the Coweys’ complaint is defective as defined by the Act.

Was the Applicant responsible?

  1. [16]
    It is not in dispute that the work actually performed onsite was performed by Kline Homes. However, it is the case that the Tribunal accepts the evidence of Mr Kline that the contract had not reached practical completion. The importance of this finding relates to whether it was reasonable for the QBCC to issue Kline Homes with a Direction to Rectify and/or Complete. Having found that the work was not yet complete, and further accepting Mr Kline’s evidence that Kline Homes had no opportunity to complete the work following the Coweys’ unlawful possession of the works, the Tribunal finds that the QBCC did not act reasonably in these circumstances.

Is it reasonable from the Applicant to rectify the building work?

  1. [17]
    The final issue for determination by the Tribunal in the review of a Direction to Rectify and/or Complete is whether it was reasonable for the QBCC to issue the Direction to the builder. As briefly mentioned above, the Tribunal considers that it cannot be reasonable to issue a Direction where it has found that practical completion had not been reached and where the homeowners took unlawful possession of the incomplete works. This is not, however, the only basis upon which the Tribunal finds that the issuing of the Direction in this matter was unreasonable.
  2. [18]
    I have mentioned that Kline Homes and the Coweys entered into a Settlement Agreement in QCAT proceeding BDL263-12. That agreement provided as follows:

The parties to the dispute have reached an agreement as follows:-

  1. The Respondents agree to pay the Applicant in full and final settlement of the dispute and any claims or counter claims herein as set out in Application No. BDL263-12 the sum of $20,000.00 within 7 days of the date of this agreement in exchange for all certificates relevant to the works completed by the Applicant to enable final certification of the property and all relevant warranties reasonably required by the Respondents.
  1. The Applicant agrees to accept the abovenamed sum in full and final settlement of the dispute and any claims or counter claims herein as set out in Application No. BDL263-12.
  1. [19]
    The QBCC submits that it took this settlement agreement into consideration when deciding whether to issue Kline Homes with a Direction following the Coweys’ complaint.
  2. [20]
    Whilst the Tribunal accepts that the QBCC did contemplate the effect of the settlement agreement, it does not agree that the QBCC gave the settlement agreement the appropriate weight in its considerations. There may be limited circumstances where a builder and homeowner enter into a settlement agreement and it remains reasonable with the QBCC to issue a Direction. This is not one of those sets of circumstances.
  3. [21]
    The only witness capable of explaining the intent of the settlement agreement was Mr Kline. His view, and the plain reading of the settlement agreement itself, is that the intent was to resolve all matters between Kline Homes and the Coweys.
  4. [22]
    The Coweys were not called by the QBCC to give evidence, in circumstances where they are the only other witnesses capable of providing evidence on the proper interpretation of the settlement agreement. As a result, the Tribunal considers that the rule in Jones v Dunkel[1] permits it to draw the inference that the Coweys’ evidence, if led, would not have assisted the QBCC’s argument that it was reasonable to issue a Direction where a Settlement Agreement existed.
  5. [23]
    This Tribunal is unable to guess what Orders may have eventuated had the Coweys and Kline Homes not settled BDL263-12 and instead proceeded to hearing. All that can now be said is that the acceptance by Kline Homes of a payment of $20,000.00 is a significant compromise from its pleaded position seeking in excess of $140,000.00.

Orders

  1. The decision of the Queensland Building Services Authority to issue Direction to Rectify and/or Complete Number 39546 is set aside.
  1. A direction to rectify is not issued.

Footnotes

[1](1959) 101 CLR 298.

Close

Editorial Notes

  • Published Case Name:

    Kline Industries International Pty Ltd v Queensland Building and Construction Commission

  • Shortened Case Name:

    Kline Industries International Pty Ltd v Queensland Building and Construction Commission

  • MNC:

    [2015] QCAT 6

  • Court:

    QCAT

  • Judge(s):

    Member Cullen

  • Date:

    06 Jan 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Jones v Dunkel (1959) 101 CLR 298
2 citations
Jump To
Cite 1 - (1959) 101 CLR 298
Cite 2 - (1959) 101 CLR 298

Cases Citing

Case NameFull CitationFrequency
A B Hill Constructions Pty Ltd v Queensland Building and Construction Commission [2015] QCAT 463 citations
1

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